There should be a provision describing the precise area which the landlord is allowing the tenant to occupy.  This provision should be checked carefully to ensure that everything is included.  For example, if the tenant is expecting exclusive use of a balcony or a garden, garage or other outbuildings, this should be specifically referred to.  For the sake of certainty, we would recommend insisting that a plan is attached to the agreement showing the exact extent of the area being granted to the tenant.

The AST should include a provision stating how long the term is for, which will make clear whether the AST is for a fixed term or periodic.

ASTs will often include a limit on the number of people who can occupy the property at any one time. You should ensure that the number of occupiers is sufficient based on the tenant’s circumstances.  For example, if the tenant wishes to occupy the property with a spouse or other family member but the number of permitted occupiers under the AST is one, this will clearly not be sufficient.  That spouse or family member should in those circumstances either:

• be included as a second tenant to the AST, if they are happy to be liable for paying the rent and complying with the tenant’s obligations; or
• be named as a permitted occupier, so they can occupy without paying rent.
  
  

ASTs will usually require the tenant to specify, at the time of the grant of the tenancy, those people who will be occupying the property.  This allows the landlord to know who is in occupation and to check their immigrant status (more details question 19 below).

An AST will usually specify how the property can be used. This may be, for example, use as a private dwelling house.  It will often also explicitly prohibit use for the purposes of conducting a business.  If the tenant does intend to operate a business from the property, this provision will need to be removed or amended.

ASTs will often restrict tenants from keeping pets or other animals on the Property without the landlord’s consent.  If that is the case, tenants should seek the landlord’s consent for keeping such pets before entering into the AST, as there is otherwise a risk that the landlord will refuse to consent to this.  It is generally considered reasonable for a landlord to refuse the tenant consent to keep pets that could harm the property, affect other tenants or be a nuisance to other neighbours.

The tenant will usually also be obliged not to do anything on the Property that is immoral or illegal, will invalidate the landlord’s insurance, or would cause a nuisance, annoyance or damage to occupiers of neighbouring, adjoining or adjacent property.  The tenant should be made aware of the importance of complying with this.

The AST will usually prohibit assignment and subletting.  This means that the tenant will not be able to transfer the tenancy agreement to a new tenant or sublet the property to a subtenant.  If the tenant is likely to want to assign or sublet the tenancy agreement, we would recommend including wording stating that assignment and / or subletting is permitted with the landlord’s consent, with such consent not to be unreasonably withheld or delayed by the landlord.

We would recommend always viewing the property before a tenant enters into an AST. During this inspection, you or your client should verify whether the property is clean and tidy and whether there is any obvious mould, rot, or damage to the structure.  You or your client should also check that the property has running water and electricity, that the taps work, and whether there are any white goods.

Under the AST, the tenant is usually required to keep the property and the furniture, furnishing and other items in a state of good repair and condition.  These items are usually listed in an Inventory which is then annexed to the AST.

Please note that an obligation to keep the property in good repair extends to putting the property into repair, even if it is in disrepair on the date that the AST is entered into.  We would therefore highly recommend including a provision in the AST limiting this obligation to a Schedule of Condition (annexed to the AST and signed by both parties) and requiring the tenant only to return the property to the landlord in the same state.  We would also recommend excluding fair wear and tear (which is deterioration occurring naturally over time) from the tenant’s obligation to repair.

The Inventory and Schedule of Condition are designed to prove the condition of the property at the start of the tenancy in the event of a dispute at the end.  They should therefore be as comprehensive as possible and the condition of the contents should be carefully recorded.  It is becoming increasingly common to use a professional inventory clerk (experienced professionals whose evidence is more independent). Your client may therefore wish to consider using such a clerk.  Please note that, in both England and Wales, a landlord cannot require a tenant to pay for an inventory check.

The tenant is usually required to keep the interior of the property clean, tidy and in the same condition as at the start of the Tenancy and to return the property to the landlord cleaned to a professional standard.  We would recommend also seeking to except fair wear and tear from this and limiting this to a Schedule of Condition.

Please note that landlords are not allowed to charge tenants to have the property professionally cleaned at the end of the Tenancy, but they can require the Tenant to return the property cleaned to a professional standard.  If the tenant fails to do so, this would be a breach of the AST and the landlord could sue the tenant for damages.

The AST will normally prohibit the tenant from making alterations and decorating the property without the landlord’s consent.  If the tenant knows that it wants to make any alterations at the outset of the tenancy agreement, it should seek the landlord’s consent before entering into the tenancy agreement.  It should also seek to make it clear in the tenancy agreement that the landlord is not to unreasonably withhold or delay its consent to any other alterations during the term of the AST.

You should always check on behalf of your client that the AST obliges the landlord to insure the property against certain risks (e.g. flooding).  In carrying out this check, you should also ensure that the landlord is obliged, if the property is damaged or destroyed by one of the insured risks so that it cannot be occupied or used by the tenant, to repair the damage or destruction.  You should also seek to include a provision stating that payment of the rent and other sums are to be suspended until the property is able to be occupied and used again.

Some ASTs will include a break clause, which is a provision allowing the landlord and / or the tenant the right to terminate the AST before it would otherwise end. Such break clauses will sometimes specify a break date on which the break may be exercised (usually on giving a set amount of notice), or it may be a ‘rolling break’, meaning that either party can terminate the AST during the term on giving notice.

If there is not a break clause in the AST, you should consider inserting one, particularly if the AST is for a longer than usual term.  If there is a break clause, you should ensure that it can be exercised by the tenant and that the tenant can comply with any of the pre-conditions.  It is common for there to be a pre-condition that the tenant has paid all the rent, for example.  If it has not paid the rent, it will not be able to break the AST.

The landlord is usually entitled to re-enter (or “forfeit”) the property if the rent is unpaid. The tenant should consider providing for a grace period of 21 days, so that the landlord can only forfeit if the rent has been unpaid for 21 days.  The tenant should also limit this to the annual rent only (i.e. not any service charge, council tax, etc.).  This will ensure that the landlord cannot terminate the AST simply because the tenant has forgotten to pay or there was a technical glitch with the payment.

Other grounds allowing the landlord to forfeit are often the bankruptcy of the tenant, the breach of the agreement by the tenant (we would recommend limiting this to ‘material’ breaches which are ‘subsisting’ only) and certain grounds set out in the Housing Act 1988.  Please see further information in Section 3 – End of tenancy regarding evictions.

You should ensure that the AST specifies the correct amount of rent and that the proposed method of payment (e.g. direct debit or cash) is practical.

Similarly, check the proposed dates on which payment is required and ensure that the tenant is aware of this.  Rent is usually payable either on the first day of each month or on the “quarter days” (which are 25 March, 24 June, 29 September and 25 December).  However, the first payment of rent is usually made on the date that the AST is entered into.  If so, you should ensure that only the proportion from and including that date to and excluding the next payment date needs to be paid.

The rent will sometimes include bills and services, so check whether that is the case.  There are pros and cons to this approach.  On the one hand, an all-inclusive rent means the amount to be paid under the AST is known at the outset.  On the other hand, however, the tenant will have no control over the landlord’s chosen service providers.

The AST will sometimes state that the rent is to increase during the term.  The increased rents may be specified in the AST or they may be calculated closer to the time, for example by reference to the previous year’s inflation rate.  You should ensure that any such provisions will work in practice and that the tenant is aware of them.

If the tenant misses certain payments, the AST will often state that interest is payable daily on the outstanding amounts, until those amounts are paid. If such provisions are included, we would recommend trying to limit the rate to either 2% or 3% above the Bank of England base rate and provide for a 14 day grace period.  In other words, so that interest is not payable on the rent until it is unpaid for 14 days.

If the landlord seeks to impose a higher interest rate, please note that in England interest is only allowed to be charged at an annual percentage rate of 3% above the Bank of England base rate on the unpaid rent for each day after the due date that the rent remains unpaid.  In Wales, the interest to be charged on unpaid rent is limited to an annual percentage rate of 3% above the Bank of England base rate for each day that the unpaid rent remains unpaid, following a grace period of seven days.

The AST should make clear which party is responsible for paying council tax and water, electricity and gas bills. It will usually state that the tenant must pay all charges for gas, electricity, water and sewerage services, and telephone, cable or satellite television services which are used by the tenant.  The tenant will also usually be required to pay council tax to the relevant local authority – please note that council tax is not permitted to be paid to the landlord directly unless it is included in the rent.

Please also note that the landlord will be responsible for council tax if the property is a house in multiple occupation (“HMO“) This should therefore be checked and addressed by correspondence between the landlord and the tenant if the landlord tries to recharge council tax as rent to a tenant in an HMO.  Please see question 6 in Section 1 for more information.

In relation to utilities, we would recommend that the tenant checks how this works in practice, for example whether or not these are separately metered.

An AST will often require the tenant to provide a deposit to the landlord of around 4-6 weeks’ rent. This is intended to provide protection against losses caused to the landlord if the tenant does not comply with its obligations (e.g. by not keeping the property in the state of repair required).  In that event, the landlord can use the deposit money to fix the breach rather than having to take the tenant to court.

Deposits that are taken in connection with an AST must be protected in a government-approved tenancy deposit scheme and certain prescribed information must be provided to the tenant.  Similarly, the AST must contain certain prescribed wording. If the landlord breaches any of this, they may be stopped from taking back possession of the property from the tenant.  They may also be required to pay a fine to the tenant.

Please note that, in England, the deposit is capped at five weeks’ rent (where the annual rent is less than £50,000) and six weeks’ rent (where the annual rent is £50,000 or more).  Similar caps are expected to be introduced in Wales in the next year or so.

You should ensure that the AST states that the landlord is only entitled to withhold sums from the deposit if it is reasonably necessary to make good any damage to the property caused by the tenant’s breach of its obligations or to pay any unpaid rent.

The AST should also specify the circumstances in which the tenant will get the deposit back.  This should either be when the tenant assigns the AST or when the AST otherwise expires, although the landlord may withhold sums in those situations where a breach has occurred.  You should also seek to ensure that any interest accrued on the deposit is paid to the tenant, rather than being retained by the landlord.

The landlord will sometimes ask for a guarantor to be a party to the AST. Such a guarantor would guarantee to the landlord that the tenant will pay the rent and observe and perform the tenant covenants of the AST.  If the tenant fails to do this, the guarantor will comply instead.  If the landlord asks for a guarantor, you should consider whether this is fair, particularly if the landlord is also receiving a deposit.

Take care to ensure that the guarantor is liable only for the period intended.  Unless the AST states that the guarantor will only be responsible for the fixed term, they will be liable for the duration of the AST, including any period during which the AST has converted into a periodic tenancy.  Please see question 4 for further information.

The landlord will usually be entitled under the AST to enter the property in certain circumstances.

You should seek to ensure that these circumstances are limited to the purposes of:

• inspecting the condition and state of repair of the property;
• carrying out the landlord’s obligations under the agreement;
• carrying out repairs or alterations to the landlord’s property next door;
• taking gas, electricity or water meter readings;
• inspecting the property for the purposes of preparing an Energy Performance Certificate (“EPC”) and Recommendation Report for the property;
• any purpose mentioned in the agreement or connected with the landlord’s interest in the property; and
• showing prospective tenants or purchasers around the property.
  
  

You should try to include an additional provision stating that the landlord is only entitled to enter the property at reasonable times (possibly specifying certain days and times when the landlord cannot enter) and on giving 24 hours’ written notice.  In any event, such provision will reflect the law that is set out in the Housing Act 1988, which means that landlords must give 24 hours’ notice to inspect the property, unless it is an emergency.

Generally, where the landlord’s consent or approval is required, you should seek to add the words ‘such consent not to be unreasonably withheld or delayed’ or ‘such approval not to be unreasonably withheld or delayed’ (as appropriate). Otherwise, the landlord is not obliged to act reasonably.

Generally, if the tenant is required to do something, consider making it ‘on written demand’ from the landlord or ‘within [x] days of notice from the landlord’.

Try to make clear that any costs sought from the tenant by the landlord must be ‘reasonable and properly incurred’ and that the landlord must act ‘reasonably’.

Where possible, avoid the tenant entering into any ‘best endeavours’ obligations and amend this to ‘reasonable endeavours’ instead.  The latter means that a person should adopt and pursue a reasonable course of action in order to achieve the desired result, bearing in mind its own commercial interests and the likelihood of success.  Under the former, a party should use all efforts necessary, even if this is against its own commercial interests.  This is therefore much stricter and harder to comply with.